On 31 March 2025, the European Commission (Commission) issued a proposed Regulation amending the Capital Requirements Regulation (CRR) on prudential requirements for credit institutions and investment firms. The amendment, if adopted, will render permanent the current transitional approach to the Net Stable Funding Ratio (NSFR) requirement.

Background

Under the Basel NSFR standard, positive required stable funding (RSF) factors are assigned to short term transactions – i.e. those with an effective residual maturity of less than six months – undertaken with financial customers. In the EU, the NSFR has been implemented through the CRR, which introduced a transitional period with lower RSF factors for short-term transactions undertaken with financial customers. For banks providing funding, short-term securities financing transactions (SFTs) undertaken with financial customers and backed by collateral in the form of Level 1 assets, including EU sovereign bonds, do not currently require any stable funding. All other short-term transactions undertaken with financial customers are subject to RSF factors of 5% or 10%. This transitional arrangement is currently set to expire on 28 June 2025.

The amendment would render permanent the currently transitory treatment of short‑term SFTs with financial customers for the calculation of the NSFR.

Next steps

The draft Regulation will be submitted to the European Parliament and the Council.

The changes will enter into force once the co-legislators have reached an agreement on the proposal and after publication in the EU Official Journal.

The Commission calls on the co‑legislators to process the proposals without undue delay given that the current treatment will end on 28 June 2025.